Market Wizards (Jack D. Schwager)
Trader's Library #14 · Interviews with traders. The absolute canon: the world's best traders on what really matters.
Author: Jack D. Schwager · Original: Market Wizards · Year: 1989 · Usefulness for traders: ★★★★★
What it's about
Interviews with the best traders of the 1980s, including Paul Tudor Jones, Ed Seykota, Bruce Kovner, Richard Dennis, Michael Marcus and Larry Hite. Each talks about their path to the top, their method, their failures and their approach to risk.
What it gives a trader
The most valuable lesson of the whole series: the best traders' methods are wildly different, but the common denominator is always the same – discipline, risk management, accepting losses, a method that fits your personality, and hard work. The book teaches you to find your own way instead of copying someone else's.
Lessons for traders
- there's no single method, but there is one common foundation: risk control
- the method has to fit your personality
- almost every interviewee had a catastrophic loss early on
- the interviewees' results are also a survivorship effect (survivorship bias, Atlas of biases #56)
What to watch out for
The interviewees are the winners, not the average. We don't hear from those who used similar methods and lost.
Which interviews to start with
- Paul Tudor Jones: protecting capital comes first, and how preparation let him profit from the 1987 crash.
- Ed Seykota: trend following and computerised systems at a time when almost nobody used them.
- Bruce Kovner: risk management in macro trading, and why position size matters more than being right.
What from this book I see in my own market
Most of the interviewees traded futures on the exchanges in Chicago and New York. It's the same type of market where I trade the Micro Dow Jones futures contract on the CME today: one central order book and real data on every trade. The technology has changed, but the book's lessons about risk are still relevant.
Frequently asked questions
- Is “Market Wizards” for beginners? Yes, as reading about the approach to risk and discipline. It isn't a technical textbook, so you won't find a ready-made strategy here.
- Which part of Schwager's series should I read next? The later volumes are built the same way. Next in the Library is #015 The New Market Wizards.
Discussion
The discussion takes place in Hetman Capital Club (in Polish). Join the discussion in the Club →
Navigation
← #013 Cityboy (Geraint Anderson) · Library index · #015 The New Market Wizards (Jack D. Schwager) →
Educational content, not investment advice. The book description is my own summary and assessment, not quotations. Edition details were checked in catalogues and bookshops, and where there was doubt I said so plainly.